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New FTC advertising guidelines are worth a review

In a recent post, I discussed how a company could be liable for referencing a third-party’s unbiased endorsement if, unbeknownst to that company, the basis for the endorsement turned out to be unjustified. In another advertising-related development last week, the Federal Trade Commission (FTC) issued new guidelines: How to Make Effective Disclosures in Digital Advertising.

One key point the FTC makes in the new guidelines is that when a disclosure is necessary to ensure that an ad is not misleading or unfair, the disclosure must be clear and conspicuous. Recognizing that this can be particularly challenging when ads are viewed on mobile devices such as smart phones and tablets and/or in the context of other emerging technologies, the FTC explains in detail how the following five circumstances affect the clarity and conspicuousness of disclosures when advertisements are viewed on non-traditional media:

Proximity and Placement

Prominence

Distracting Factors in Ads

Repetition

Multimedia Messages and Campaigns

Although the entire publication is less than 25 pages of text (including a number of useful examples), you can review a nice summary of the new guidelines in a post in the Covington and Burling blog, Inside Privacy.

In-house counsel should be aware that publishing misleading advertisements can lead to consequences that go beyond merely being liable for damages, particularly in jurisdictions that have statutes commonly referred to as “Little FTC Acts,” i.e., state laws that parallel the Federal FTC Act. Many of these statutes not only allow the state Attorney General to impose fines and penalties, but some, like Massachusetts’ M.G.L. c. 93A, allow a private right of action by a consumer who has been subjected to deceptive or unfair acts or practices. Further, Chapter 93A not only entitles a prevailing party to recover legal fees, but it also allows for double or even treble damages, if the deceptive or unfair act or practice at issue was perpetrated knowingly or willfully. Chapter 93A even has a separate section that allows businesses (as opposed to simply consumers) to bring claims against other businesses.

In sum, in-house counsel whose companies advertise on-line or digitally should review the new FTC guidelines and ensure that any business people involved with advertising also familiarize themselves with those guidelines. Likewise, whether or not your company engages in formal advertising, it is a good idea to learn about any Little FTC Acts on the books in all jurisdictions in which your company does business.

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